November 16, 2018
Cross-Border: Top 10 M&A Trends
This Cooley blog lays out a “top 10” list of cross-border M&A trends for 2018. Topping the list is the growing global emphasis on national security concerns associated with foreign investments. This excerpt highlights key national security developments:
– There is an increasing range of industries and businesses with national security touch points that historically would not have raised any eyebrows, including in semiconductors, AI, virtual reality technology, robotics and large-scale data storage. Technological superiority is now commonly equated with national security.
– In October 2018, CFIUS (the Committee on Foreign Investment in the United States) launched a pilot program to require mandatory notification of certain non-controlling investments by foreign persons in U.S. businesses touching “critical technologies.” The pilot program is a material move away from what used to be a principally voluntary regime.
– In July, the U.K. government published a white paper on its proposal to allow the scrutiny of foreign investments in any sector of the economy upon a “reasonable suspicion” of a national security threat. Examples include review of investments that may potentially lower R&D or that involve access to personal records. The U.K. government estimates that if this proposal, which looks very similar to the CFIUS construct, is adopted, it will lead to a material increase in notifiable transactions.
Other trends highlighted include the growing impact of trade relations on individual deals, the rise in failed deals due to the increased politicization of the deal process, the increasing prominence of “mega-deals,” & increasing competition for high-quality assets.
– John Jenkins